New Data Center Tax Exemption Guidelines Sidestep Clean Energy Requirements
LANSING, MI – In a letter to the board of the Michigan Strategic Fund (MSF), environmental and utility watchdog groups are requesting revisions of recently released guidelines for data center tax exemptions that do not currently comply with Michigan law.
The Michigan Environmental Council, NRDC (Natural Resources Defense Council), Sierra Club, and Citizens Utility Board of Michigan in a letter drafted on their behalf by Troposphere Legal point out that MSF’s current guidelines for enterprise data center tax exemptions do not adequately enforce the clean energy requirements enshrined in Michigan state law.
MSF’s guidelines currently state that an enterprise data centers comply with tax exempt status by merely contracting with a utility provider that is subject to Michigan’s clean energy regulatory framework. This is an incorrect interpretation of the law.
Michigan’s Tax Act clearly states that to satisfy clean energy requirements for tax exemptions, applicants must prove that their data center facility has procured—or will procure within six years—90 percent of their power from clean and renewable energy sources as defined in Michigan’s Clean and Renewable Energy Act. Simply contracting with a utility provider subject to our clean energy laws will not ensure a data center procures 90 percent clean energy as no utility in Michigan has a 90 percent clean energy mix currently nor will they in six years. In order to adequately meet the 90 percent clean energy requirement data centers must work with Michigan utilities to procure additional clean energy to power their operations.
Read the full text of the letter to MSF here.
Statements from MEC, NRDC, Sierra Club, and CUB leaders:
“Michigan lawmakers created a clear standard: If a data center wants a tax break, it must show it will run on 90 percent clean energy. But this interpretation creates a massive loophole,” said Derrell Slaughter, Michigan policy director, Climate & Energy, NRDC (Natural Resources Defense Council). “Without clear and firm language to enforce the clean energy provisions, the standard becomes something companies can evade, and the costs and consequences land on Michigan communities and ratepayers. The board should close this loophole and ensure these large new customers strengthen our clean energy goals rather than weaken Michigan’s ability to meet them.”
“The MSF’s current interpretation creates a loophole big enough for any data center to walk through, one that undermines Michigan’s nation-leading clean energy laws,” said Tim Minotas, Sierra Club Michigan’s legislative & political director. “As energy-hungry data centers expand into our state, MSF must correct these guidelines to conform with Michigan’s values and our clean energy requirements.”
“Across the country, data centers are prolonging the life of expensive, dirty fossil fuel power plants or leading to the build out of more. Michigan’s legislature clearly recognized the threat of energy intensive data centers to our climate and acted to ensure the onus was on data centers to power their operations with 90 percent clean energy,” said Charlotte Jameson, chief policy officer for the Michigan Environmental Council. “Being good corporate citizens in Michigan requires data centers to do their fair share to transition the state to clean, affordable energy. We urge the Strategic Fund Board to correct their guidance, which currently renders the law’s 90 percent clean energy requirement meaningless and undermines Michigan’s clean energy future.”
“Without strong enforcement of the laws, data centers could cause Michigan ratepayers to be saddled with new dirty energy sources for decades," said Amy Bandyk, executive director of the Citizens Utility Board of Michigan. "The Strategic Fund Board must close this loophole to protect both consumers and the future of Michigan's energy economy.”
NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law and people power to confront the climate crisis, protect public health and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Beijing and Delhi (an office of NRDC India Pvt. Ltd).